Category Archives: Financial Literacy

Financial Literacy FAQ

What do we teach non-members in our free financial seminars?

We generally teach concepts to non-members in the free financial seminars. We teach them the value of simple living, investing early and the power of small repeated actions. We teach them about BENEFITS (what product features do for people) and why financial products are necessary.

We make saving, investing and insurance understandable to the layman because we don’t bamboozle attendees (yet) with technical terms.

What do we teach in our free financial workshops?

We have five workshops:

  1. Increasing cashflow and debt management
  2. Building a solid financial foundation and proper protection
  3. Building wealth.
  4. Preserving wealth.
  5. Entrepreneurship

The most common comment in the seminars and workshops is that they finally understand the concepts of saving and investing.

IMG Membership Banefits

IMG Membership Benefits can be grouped into four classes: (1) financial literacy, (2) access to financial solutions, (3) discounts on products and services, and (4) business in the financial industry.

What do we teach members?

Members have at least 18 member benefits, including eligibility to attend technical product training, conducted by licensed representatives/trainers of our partners. Partner companies teach members about the FEATURES (features is about the product)

For example:

  • Our insurance product training is handled by Philam.
  • Our mutual fund product training is handled by Rampver Financials.
  • Our Kaiser Long Term/Short Term product training is handled by Kaiser International Healthgroup.
  • Our real estate training is handled by DMCI, SMDC, Ayala Land and Vista Land, etc.etc

We also have special investment seminars, conducted by the most respected names in the financial industry

What do we teach partners?

Partners are members who want to do the IMG business.

We have twice a week partners training, to educate partners about the IMG mission, about membership benefits, and how to build a big business in the financial industry.

We have three big events every year, two international conventions plus the annual Convention of Champions. The Convention of Champions is usually a two-day event, a training day, and a gala night where IMG honors and recognizes its champions for the past twelve months.

Look at Everything as Training

IMG is on a mission to help 1M Filipino families achieve financial freedom through education by 2020.

We have the best good-hearted mentors, like Joen delas Penas, Noel Arandilla, Bart Borja, and Rex Mendoza,  to inspire and provide directions in this mission.

But Brother Bo Sanchez is perhaps our most inspiring mentor, who “pushes” us to excel and be the best we can be, so that we can be blessings to more people. In our 2015 RISE Convention, he started by saying “Jesus was a businessman!”

He noted that Jesus

  • spend 17 years as a businessman/entrepreneur,
  • spent only only 3 years in preaching, healing and driving out demons.
  • was an apprentice carpenter at age 13
  • apart from his trade, did accounting, collected payments, entertained customer complaints

Jesus sanctified business! Look at everything as training!

He told IMG members:

  • “Your service, your product, is the financial freedom, and financial well-being of your customers.”
  • “Go out there with pride, go out there with joy. There’s nothing to be ashamed of.”
  • “You do not win the battle in the battlefield.”
  • “You win the battle, before the battle begins.”

Bo Sanchez related the story of David and Goliath. David said:
“I fought and defeated the bear and the lion when I was the shepherd.”

David saw the bear and the lion as training.

Bo added:
Look at everything as training! You are facing your lion, you are facing your bear right now. If you see this as training, and you endure, and you persevere, and you don’t give up, it is training you because the Goliath is coming.

And when you defeat the lion and the bear right now, you will have all that you need to defeat the Goliath. And when you defeat the Goliath, you are going to become King.

“I fought and defeated the bear and the lion when I was the shepherd.
— David”

Bo Sanchez ended with two short messages

Always choose growth over money.
If you choose growth, the money will follow.
If you choose money, the growth will not follow.

Grow in your personal life
Grow in your intellectual life
Grow in your relational life
Grow in your spiritual life

Look at everything as training.

See everything as training because bigger things are going to happen in your life.

Live a fantastic life.

If you want to be a part of IMG:

  • to learn about financial concepts and strategies
  • to have access to hundreds of financial products
  • to save money on products, and your own financial transactions
  • to help family and friends learn about money
  • to learn and earn, while helping others

then we invite you to attend our membership orientation seminars:

In Quezon City (JIAO Bldg. Timog Ave cor Quezon Ave)

In Makati (World Center Bldg, Sen. Gil Puyat Ave, in front of Mapua)

In Las Pinas (Palm Square Bldg, Alabang-Zapote Road, beside Las Pinas City Hall, across PLDT)

In Sta Rosa Laguna (Mercury Bldg, Balibago Complex)

In Calamba (Margimel Bldg, National Highway cor Chipeco, Brgy Halang)

In Dasmarinas, Cavite (ALC Bldg, Camerino Drive)

11 Reasons to be an IMG Member

by Coach Bobet Prudente

Two years ago, I “retired” from my corporate job, and planned to start my own business intelligence company. But something happened along the way.

I became an IMG member, and a happy warrior in the fight against poverty.

IMG started its mission to help Filipino families become financially free more than 18 years ago. Through the years, we helped Filipinos learn about money, provided access to hundreds of financial products, and helped many save money through discounts and rebates.

Here are eleven reasons to be among the more than one hundred thousand (100,000+) IMG members worldwide.

1. Financial education workshop

IMG has been giving free financial seminars for many years.

IMG recently launched its Global Campaign for Financial Literacy, and the target is one million financially literate families by 2020.There are now five new two-hour workshops on (1) increasing cash flow and debt management; (2) building a solid financial foundation and getting proper protection; (3) asset accumulation and growth; (4) asset and wealth preservation, and retirement planning; and (5) entrepreneurship.

IMG members get a FREE workbook to use in the workshops.

2. Free financial check-up

When you have questions/concerns about your health, you get a medical check-up. When you have car problems, you go get a car check-up.And if you have questions about your wealth and finances?

IMG members get FREE financial check-up from their trainers and mentors. Members sit beside their trainers to prepare personal financial needs analysis and create personal financial plan/blueprint.

Top 5 Reasons to be an IMG Member

1. Financial Workshops.
2. Financial Checkup
3. Asset Preservation Services.
4. Access and discounts to car, home and other non-life insurance.
5. Discount on real estate from SMDC, Ayala Land,DMCI and Vista Land.

3. Access to asset preservation services

We all strive to accumulate assets in our lifetime to pass to our family and next generation. And when God calls us home (unfortunately, sometimes a little sooner than expected), everybody tells our family they are sorry for the loss, but the government will first freeze your assets until your heirs pay up to 20% of the estate value in taxes.

Asset preservation is about an orderly transition of your assets to your heirs, according to your plans and wishes, and possibly about paying less taxes.IMG members have access to tools and services to setup corporations for asset preservation or other purposes through its corporate services partner company.

4. Discount on car, home, property, and other non-life insurance products

Do you need insurance for your home? Car? Equipment? Many people need insurance for many reasons, and sometimes it is a pain to get hold of the proper insurance agent, and pay sometimes expensive premiums.IMG members have access to a multitude of non-life insurance products from respected providers such as MAPFRE Insurance, QBE Insurance, Malayan Insurance, UCPB Gen, Prudential Guarantee, and many more.

IMG members also get discounts in the form of rebates on their own insurance requirements.If you own a business with non-life insurance requirements, the discounts on insurance alone is reason enough to be a member!

5. Discount from real estate companies

Many Filipinos eventually buy real estate, maybe a house and lot, or a condo, through a middleman such as a real estate agent or broker.IMG members buy directly from real estate giants like SM Development Company (SMDC), Ayala Land (ALI), Vistaland (VLL), and DMCI Homes, effectively bypassing the middlemen.

IMG members usually get another 2 to 3% discount on real estate purchases.On a P3M property, that is about 2% x P3,000,000 or P60,000.

Another reason to be an IMG member!

6. Access to affordable life insurance products and services

IMG members can enroll in its IMG group yearly renewable term plan with Philam Life, the biggest life insurance company in the Philippines. This plan is the most inexpensive in the market. For members below 36 years old, it costs about P3,600 ANNUAL premium to get a P1,000,000 life insurance coverage, with riders for accidental death, dismemberment and disablement (ADDD), including a P500,000 terminal illness benefit (TIB). That means a P1,000,000 coverage for as little as P10 a day.This is another benefit available to IMG members (with additional requirements).<

7. Access to short-term and long-term healthcare products and services

Most Philippine HMOs offer short term health care products to big companies for the benefit of their employees. This provides excellent healthcare to the generally young and healthy corporate employees while they are employed.Long term healthcare is like “pre-paid” healthcare.

Individuals pay for healthcare while they are relatively young and healthy and productive, planning to use the healthcare when they are old, sickly, unemployed or retired.Kaiser International Healthgroup Inc, a duly-accredited HMO in the Philippines (I think the third biggest HMO) registered as a Healthcare Provider and Accredited Broker for Other Health Care Companies, offers both short-term and long-term healthcare products, numerous corporate, schoool and government accounts ( House of Representatives, Court of Appeals, Public Attorney’s Office, Department of Agrarian Reform, Technological University of the Philippines, Honda Motor World, Makati Finance Corporation, Royal Oaks International School, Seminario de San Agustin, etc).

IMG members have access to innovative healthcare products from Kaiser International, Inc, including long term healthcare with investment component, and senior healthcare for age 61 – 100.

8. Enjoy zero load benefits to various mutual funds

Mutual funds are among the least understood secrets of the wealthy, mainly because mutual fund companies do not advertise or do much marketing. Yet, mutual funds are among the safest and easiest way to steadily grow your money.

The normal way to invest in these companies is to do your own research, choose, then go to each mutual fund company office, and pay up to 3.5% sales load (or commission) for those who handled the transaction.

IMG members can go to free mutual fund training and briefing sessions every month and discuss concerns with certified investment solicitors. Members consult other members, investment solicitors, even respected leaders in the mutual fund industry such as Rex Mendoza, found chairman of Rampver Financials to decide on which mutual funds to invest in.

Members can open mutual fund accounts for any of the 40+ mutual funds from Soldivo Funds, PhilEquity Management Inc (PEMO), PhilAm Asset management Inc(PAMI), First Metro Asset Management (FAMI), SunLife Financials, and ATRAM, from the IMG Financial Center in Makati, Cebu and Davao.AND the best part is….

IMG members enjoy ZERO load benefits when investing in any of these funds.

  • If you invest P100,000 directly in mutual fund through traditional channels, you may pay up to P3,500 in sales loads, effectively investing only P96,500.
  • If you invest P100,000 as an IMG members, through IMG, there is zero load and you invest the entire P100,000.

9. Business ownership program opportunity in the financial industry.

IMG members who want to increase their cashflow can earn extra income by helping other people save and invest, while keeping their job or business.Access to all of IMG’s partner companies is an optional business opportunity for members who could use it to build a career or big business in the financial industry.

Membership benefits.

6. Access to Life Insurance products.
7. Access to Healthcare products and services.
8. Access to mutual funds at ZERO load. Exclusive to IMG members.
9. Business Ownership program.
10. Opportunity to travel the world thru IMG business program.

10. Opportunities to travel the world for free through the IMG business program

IMG members who do the IMG business program and meet performance targets get subsidies to attend and enjoy the IMG local and international conventions, and free packages for international cruises.

11. Community of Savers and Investors

Enrolling in IMG means joining a community of savers and investors, enabling members to consult mentors, share experience and compare notes with other community members with similar values.
Truly Rich Maker

In IMG, you become friends with awesome people who will selflessly guide and encourage you to practice financial discipline in your journey to financial freedom.Enrolling in IMG means joining a community of savers and investors, enabling members to consult mentors.

If you want to lean more about IMG, you can start by attending our free seminar.

Fill out the form below to reserve your spot. Register early, there are limited slots available!

IMPORTANT:

If there is no form above, please refresh this page

A few minutes after you submit your registration, you will receive, in the email address you provided, a confirmation email asking you if you submitted the information to this form. This is to ensure that you (and not just someone who used your email address) knowingly registered your name.

YOU MUST CLICK on the confirmation link to complete your registration.

After you have confirmed, we will send you E-Ticket mail. If you do not receive the confirmation mail, or e-ticket, please check your spam mail in case it got over-enthusiastic and discarded our mails.

Usual Schedules in Makati

  • Every (Tuesday) at 9:30am and 2:00pm and 7:00pm
  • Every (Thursday) at 9:30am and 2:00pm and 7:00pm
  • Every (Saturday) at 9:30am and 2:00pm and 7:00pm

Venue:
World Centre Bldg
Gil Puyat Ave (formerly Buendia)
Makati
(in front of Mapua)

Click here to register for the seminar in



Enjoy Your SSS Pension – P1,200 per month?

by Bobet Prudente

Imagine retiring, and getting a pension of P1,200 per month.

If you read the newspapers, you probably remember the President was in the headlines in early 2016, for vetoing a proposed law raising the pension of SSS retirees by P2,000 per month. He said doing so will bankrupt the SSS fund.

It was such a distressing news. SSS could not afford to raise the pension by P2,000?

Maximum Contribution for 30 years

I computed how much I’d get as pension when I turn 60. I was a senior manager for more than 30 years, and hence paid the maximum SSS contribution for 30 years. Therefore, I expect the highest possible pension for 30 years contribution.

And the number I got was….. (drum roll please) ….. P 9,900 per month!

What?

How could a highly paid employee, paying maximum contribution for 30 years, survive on P9,900 per month when he retires?

But that is NOT the sad part. P9,900 is for those who paid maximum. How about those who paid less?

What if you paid for only 10 years?

There are Filipinos who paid less, and contributed for 10 only years.

The minimum pension after paying 10 years is P1,200 per month!
Can you imagine living with a pension equivalent to P40 PER DAY?

The maximum pension after paying 10 years is P6,400 per month.

What if you paid for more years?

If you contributed:

  • for 10 years, your pension will be P1,200 – P6,400 per month.
  • for 15 years, your pension will be P1,200 – P6,400 per month. (same as 10 years!)
  • for 20 years, your pension will be P2,400 – P6,700 per month.
  • for 30 years. your pension will be P2,400 – P9,900 per month.
  • for 40 years, your pension will be P2,400 – P13,100 per month.
  • for 45 years, your pension will be P2,400 – P14,700 per month.
Maximum SSS Pension after 20 Years of Contribution : P6,700

After contributing the maximum SSS premiums for 20 years, you will be eligible to a maximum pension of P6,700

We must build our own retirement fund!

Obviously, we can’t depend on the government or the SSS to provide us enough during our retirement. We must take control of our future, and build our own retirement fund. Otherwise, we might be among those who will retire with a P1,200 pension, or if you contribute the maximum premium for 30 years, P9,900 per month.

Do we want to prepare for your retirement?
We must take control of our future, so we will not retire dirt-poor.

Would you like to attend our free 1-hour “Building Your Future – Controlling Your Money” seminar in various locations, to get financial education?

After attending the Building Your Future seminar, you can attend workshops 1 to 4 at the
World Centre for FREE.

The third workshop is particularly interesting if you are planning to build your retirement fund.

Workshop #3. Building Wealth. Asset Accumulation.

  • Wealth Formula.
  • The Hidden Cost of Waiting.
  • The Rule of 72. Understanding Interest.
  • Peso Cost Averaging.
  • Mutual Funds.
  • Passive vs. Active Management.
  • Saving for your Children’s Education.

Plan to retire rich and retire happy!

p.s.
My wife Mary Ann and I conduct the “Building Your Future” financial seminars on Mondays at 2pm and 6pm in Quezon City.  Click here to register for our FREE seminar.

Take Charge of Your Children’s Future!

By Bobet Prudente

I remember 39 years ago, when I first enrolled at the University of the Philippines in Diliman, Quezon City. I was a full scholar and didn’t have to pay for tuition fee, but we were still assessed. And our typical assessment was about P300 tuition and fees for the entire semester. Not P300 per unit, it was about P300 for the entire semester.

UP Diliman

The Oblation at the University of the Phillipines in Diliman, Quezon City.
By Rinangel Buenavente, Crispin Sta. Ines [Public domain or Public domain], via Wikimedia Commons

Last January, my youngest son enrolled in the same campus at UP Diliman, and his tuition and other fees totalled P30,000. And I think UP has not increased tuition fees for at least 5 years.

Let us do the math.
* P300 x 10 = P3,000
* P300 x 100 = P30,000

In my lifetime, in 39 years, the tuition fee in my school increased 100 times, or about a compounded rate of 12.5% every year.

How much would YOU pay for YOUR children’s college education?

Most of you will be sending kids to college in less than 15 years, so maybe you will not pay 100x, but perhaps 8x to 10x what YOU paid when you were in college?

I talked to a seminar attendee a few weeks ago, and asked him how much he paid in college. He said, P15,000 tuition fee per semester.

Let us do the math again:

  • in 15 years, maybe tuition will increase only eight times.
  • P15,000 x 8 = P90,000 in one semester
  • P90,000 x 8 semesters = P720,000

And that is just for tuition. How about other school fees, transportation, allowance?
Let us say you spend another P280,000, and the cost of sending one child to college is P1,000,000.

If the basis is P30,000 (like what I paid in UP Diliman), the cost of sending one child to college in 15 years, will probably be P2,000,000

If you have two children, that is P2,000,000 to P4,000,000 you’ll be spending in 15 years.  Are you preparing to send your children to college?

Are you saving and investing so you’ll have an extra two to four million pesos in 15 years?  Are you saving enough, so you’ll have some money left over for your retirement?

Would you like learn ways to increase your cashflow, save and invest, so that you can send your children to college?

IMG launched a new seminar “Building Your Future” in January 2016 to help Filipino families achieve financial freedom through financial education, saving and investing. Our goal is to have 1 million financially educated families by 2020 ( hashtag #1M2020 )

Would you like to attend our free 1-hour “Building Your Future – Controlling Your Money” seminar in various locations, to get financial education?

Would you like to take charge of your children’s future?

#1M2020

Bo Sanchez’ TrulyRichClub is better than Stock Market Seminar

Let me share with you why I think joining Bo Sanchez’ TrulyRichClub can (in some ways) be better than attending the live Bo Sanchez Stock Market seminar.

Bo Sanchez’ Stock Market seminar will be at least cover the following major topics:

  • theology of money
  • how simple it is to invest in the stock market
  • strategic averaging method
  • getting a stock market account

Bo Sanchez’s materials for these topics are available to all members of the TrulyRichClub.

Blessing #5 for members is the “How to be TrulyRich” seminar, which basically discussed Theology of Money: the ultimate purpose of being rich is to help bless others.

Blessing #10 is a free eBook “My Maid Invests in the Stock Market” which details how simple it is to invest in the stock market.

Day zero downloads for new members introduce the following:

  • Strategic Averaging Method
  • how to get a stock market account
  • how to use the Stocks Update Newsletter to guide you on what stocks to buy

Blessing #11 is the Stocks Update Newsletter

Day zero downloads also include a PDF and tutorial video on

  • how to get a stock market account

So actually, it is much better to join the TrulyRichClub (continued online mentoring) than attending the seminar.

It is like having a concert DVD you can play again and again, versus attending the actual concert.
Attending the Stock Market Seminar simply teaches you how to gain financial wealth through the Philippine stock market.  Joining the TrulyRichClub also teaches you how to gain spiritual abundance as well.

Members get 11 blessings:

  • Blessing #1 Receive 2 “PowerTalks” every month (instant access via MP3)
  • Blessing #2 Receive Bo’s “Success Mentors” Collection (1 every 3 months for 1 Year) — FREE
  • Blessing #3 Receive “WealthStrategies” newsletters every month — FREE
  • Blessing #4 Receive “Daily GodWhispers” Email — FREE
  • Blessing #5 Receive “How To Be Truly Rich Seminar” — FREE
  • Blessing #6 Receive “How To Conquer Your Goliath” Ebook — FREE
  • Blessing #7 Receive “How To Turn Thoughts Into Things” Ebook –FREE
  • Blessing #8 Earn Passive Income by being Bo’s Affiliate in the TrulyRichClub
  • Blessing #9 Earn Passive Income with Bo’s other Internet Work
  • Blessing #10 Receive The Very Practical Ebook, “My Maid Invests In The Stock Market…And Why You Should Too.” — FREE
  • Blessing #11 Receive “Stocks Update” newsletter — FREE

Note that the last blessing #11, the Stocks Update newsletter, also gives you stock tips on

  • what stocks/issues to buy,
  • how much to buy,
  • what stocks to sell,
  • how much to sell.

It is stock market investing made easy!

Listen to Bo Sanchez tell you how to join the TrulyRich Club!

How to Spend Your 13th Month Pay

Merry Christmas!

It’s that time of the year when Filipinos are happiest.  Many are eager to receive their 13th month pay to buy presents for family and friends, and to splurge a little on gadgets.  For some, there are extras, perhaps even a 14th and 15th month pay.

How do I spend my 13th month pay?

How do I spend my 13th month pay?

How do you use it?  I strongly suggest you think a little beyond the holiday season, Christmas presents and merry making.  Why don’t you….

  1. Plan

Close to 70% of people who get large amounts of money go broke within 5 to 7 years.  This is because many people are so unfamiliar with having a large amount of money.  Plan how to use your money, and budget how much you want to spend for Christmas and how much you want to allot for more productive use.A good rule of thumb is 10% for your spiritual community, 20% for your future, and 70% for your expenses and lifestyle:

  • 10% for your eternity
  • 20% for your maturity
  • 70% for your family

And then you plan further.  How do you spend your 70%?

  1. Protect Your Family

Have you considered what would happen if the Lord decides to call you home early?  What would happen to your family?  You can be healthy today, but what if tomorrow, you meet an accident?  Will your family go hungry?Buy SUFFICIENT life insurance coverage.  There are inexpensive options available, such as term life insurance.  P6,000 annual premium at age 25 can buy you P1M coverage.Combined with some mutual fund investments, P3,000 per month for 10 years can  buy P1.2M of life insurance at age 25, slowly growing to more than P4.8M coverage ( or P3.8M cash benefit) by age 60.

Learn about protection, savings and investment in free seminars,  like the SAVING YOUR FUTURE seminars on Practical Money Management from IMG.

  1. Eliminate debt

The typical Filipino makes strange financial decisions.  Most save in banks where their money earns 0.20% per year (that simply means if you put P100,000 in the bank on Jan 1, then by December 31, the bank will give you P200 interest after withholding tax), but borrow from the “friendly Bumbay” at 5-6, or from the “sosyal” credit card company at 3.5% PER MONTH.

Pay your credit card debt. By paying  credit card debt you effectively invest your money at a rate at least equal to the 3.5% they charge you.

Read more about How to Invest by Paying Your Credit Card, and earn an equivalent compounded annual growth rate of approximately 51%

  1. Invest

Investing is increasing the value of your assets using your existing resources, like time and money.  While some consider investing a science, there are enough elements of creativity involved, I prefer to think of it as an art.Investing in your greatest asset – you – is probably your best investment.  You probably invested hundreds of thousands of pesos in your formal education (elementary, high school, college) so you can get a good job, and work for money.

Invest in your financial education, to learn how make money work for you, and to gain financial wealth and spiritual abundance at the same time.  Join the TrulyRichClub.

Start by taking a crash course in stock market investing.Invest in safe investment vehicles to build your retirement fund and your children’s college funds. Equity mutual funds and UITFs are good starting points.

  1. Setup Your Emergency fund

Setup your emergency fund, normally three to six months of your living expenses.  Emergencies are for emergencies or unexpected large expenses such as medical emergencies or temporary unemployment.  Sale in malls are not emergencies, even if your dream shoes are on sale at 70% off.

Keep your emergency funds in savings or time deposits.

  1. Indulge

Spend a little on yourself.  Save specifically on little pleasures for yourself, maybe an occasional vacation or adventure.  Save for your future, but  treat your present self every now and then.

A note on the 10% for Eternity

Share your blessings  to your spiritual community and to the less fortunate.  Remember we are merely managers of of God’s wealth.  Giving actually makes you feel more blessed, and appreciate the abundance of God’s universe.  Giving makes you win in all areas of your life.  In other words, TrulyRich.


Bobet Prudente is a financial coach and Senior Marketing Director at IMG TrulyRichMakers.  He is a member of Bo Sanchez’ TrulyRichClub .  He conducts regular FREE Saving Your Future seminars on Practical Money Management Techniques in Quezon City.

 

Kwentong May Kwenta

Literally, “Kwentong may kwenta” means  either

  • stories that matter
  • stories with calculations

In this site, “Kwentong May Kwenta” mean stories with calculations that matter. There are many financial articles that explain financial concepts in great detail, citing numbers which seem magically derived from some advanced mathematics bordering on rocket science.

Our  “Kwentong May Kwenta” use tables of numbers to illustrate financial concepts, and practical applications, showing simple calculations one can do with a basic calculator or Excel.  The computations are easy to replicate for use in actual, personal situations.

We do not even expect readers to do computations.  We hope that by showing numbers to illustrate concepts and practical applications, the readers simply appreciate and relate to the concepts shown.

 

How to Invest by Paying Credit Card Debt

Do you have credit card debt?

If you have credit card debt, one of the best gifts you can give yourself is to pay your credit card aggressively. Paying high-interest debt is actually a very good investment strategy, sometimes “earning” you more than 50%

It isn’t enough to just pay the “Minimum Amount Due” every month. Create a payment plan, put it in writing, and attack your credit cards, starting with the highest interest credit card first. If the cards have the same interest rate, choose the one with the lowest balance.

Cut up your credit cards!

Aggressively pay your credit cards starting with the card with highest interest rate.

What happens if you just pay minimum? Let’s take a look. Suppose

  • you have credit card debt of P20,000 in one credit card
  • you do not add any more debt to that one credit card
  • your monthly interest rate is 3.5% and
  • you normally pay only the minimum P500 per month for this card
  • you keep your other credit card payments constant
Paying Minimum

Paying only the Minimum Amount Due will often increase your debt

After the first month, your P20,000 debt incurs 3.5% interest or P 700, and you pay P 500 only, so your ending balance is P 200 higher at P20,200. After 12 months, you would have paid P 6,000, but incurred P 8,920.39 in interests! Hence your ending balance after 12 months is higher at P22,920.39. Your debt and P 6,000 payment actually lost you P 2,920.39 or 49% loss!

But what if you decided to save an additional P10 per day or P300 per month to add to your credit card payments. That isn’t much, right? Instead of paying the minimum P500, you pay P800.

Pay more than minimum

Paying more than minimum, at least more than monthly interest, will reduce your credit card balance.

Because you are paying P800, or more than the interest (3.5% of balance), your debt actually shrinks every month. Specifically, your P20,000 debt will shrink to P18,539.80 in 12 months. This means your twelve P800 payments totalling P9,600 earned P20,000 minus P18,539.80 equals P1,460.20 or about 14.6%* !!!

But what if, when you get your 13th month pay, you use part of it to make a large payment on your credit card debt? What if, after deciding to save an extra P10 a day or P300 a month, you paid P7,500 on the first month?

Balloon Payment

Making a balloon payment reduces the interest rate

The balloon payment of P7,500 substantially paid the balance of your P20,000 debt, so after the P700 interest, first month ending balance is P13,200. Hence subsequent interest per month dropped initially to P450 then lower every month.

So your debt shrinks faster every month, up to P8,758 after 12 months! This means your P7,500 plus P800 every month totaling P16,300 earned P20,000 minus P8,758 equals P11,242 or about 69%* !!!

But let us make a real plan. Can you save P33/day instead of P10/day? The P23 difference is about the price of a cup of coffee at the cafeteria, or that modest ‘turon’ after lunch. That translates P1,000 per month. What if, in addition to your P7,500 on the first month, you add the P1,000 to the original P500, and pay P1,500 per month?

Aggressive Payment

Aggressively paying your credit card debt will enable you to quickly retire your debt

Wow! Is this for real? The P7,500 initial payment reduced the balance to P12,500 plus P700 interest increased the first month end-balance to P13,200. But the aggressive repayment at P1,500 per month very quickly reduced the balance to P1,022.81 after the 11th month, enabling you to fully retire the P20,000 debt after only 12 months!

Just think about this. Your P23,558.61 in payments earned you enough to fully retire one credit card with P20,000 beginning balance. That is like earning P20,000 on P23,558.61 in one year or 85%! Where can you find an investment that gives you 85% in a year?

After 12 months, it is time for your 13th month pay again. Time to start retiring your second credit card or next P20,000 debt. It will be easier for the second card. If you were paying minimum of P500 on your second credit card, you can then pay P1,500 more ( what you were paying for the first credit card ).

Pay high-interest debts! It is one of the best investments you can make!

* Strictly speaking, the effective interest rate is the same as the credit card rate, approximately 3.5% per month, or a compounded annual rate of approximately 51%.


Learn more about Practical Money Management Techniques in our FREE Saving Your Future seminars in

Related topics